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NZ's Fonterra sells Tip Top ice cream to Froneri for NZ$380m
DAIRY group Fonterra on Monday confirmed the sale of its New Zealand Tip Top ice cream business to UK-based Froneri for NZ$380 million (S$342.5 million), as it looks to trim its portfolio and focus on international markets.
The world's largest dairy company had said last year that it was considering options for Tip Top, and on Monday flagged several bids for the business.
The Tip Top brand is more than 80 years old, and was incorporated into Fonterra in 2001, as part of its purchase of Peter and Browne's Foods Business.
The sale represents a gain of about NZ$100 million above book value, which would have a positive 6 cents-per-share impact on earnings, Fonterra said in a statement.
Fonterra's margins are under pressure from a slowdown in milk production, owing to unnaturally hot weather across its key Australia and New Zealand regions. However, overseas demand for its products, particularly from Asia, remains robust.
Fonterra had last year unwound a joint venture with Chinese infant formula group Beingmate Baby & Child Food Co Ltd.
The dairy producer on Monday said it had entered an agreement with Froneri to supply milk, and that the Tip Top name and its operations, including an Auckland-based factory site at Mt Wellington, will be maintained.
The deal is expected to close by the end of May, and Tip Top employees will be transferred across to become part of Froneri by its conclusion, Fonterra said.
Froneri, which is an equally held joint venture between the Swiss Nestlé and Britain's R&R Ice Cream, is one of the largest ice cream makers in the world, with operations in about 20 countries.
Froneri said in a separate statement that it intended to invest further in the Tip Top brand, and that the business would continue to be led by the existing management team.
Fonterra's shares were roughly 1 per cent higher after the announcement, in a flat broader market. REUTERS